Class action says Uber’s “methodical scheme” manipulates rider fares, driver pay
Uber has devised a “clever and sophisticated” scheme in which it manipulates navigation data used to determine “upfront” rider fare prices while secretly short-changing the driver, according to a proposed class-action lawsuit against the ride-hailing app.
When a rider uses Uber’s app to hail a ride, the fare the app immediately shows to the passenger is based on a slower and longer route compared to the one displayed to the driver. The software displays a quicker, shorter route for the driver. But the rider pays the higher fee, and the driver’s commission is paid from the cheaper, faster route, according to the lawsuit.
“Specifically, the Uber Defendants deliberately manipulated the navigation data used in determining the fare amount paid by its users and the amount reported and paid to its drivers,” according to the suit filed in federal court in Los Angeles. Lawyers representing a Los Angeles driver for Uber, Sophano Van, said the programming was “shocking, “methodical,” and “extensive.”
The suit (PDF), which labeled the implementation of Uber’s technology as a “well-planned scheme to deceive drivers and users,” is one of a number of lawsuits targeting the San Francisco-based company. The suits range from disputes over drivers’ employment rights to sex discrimination to trade-secrets theft. Just weeks ago, Uber’s CEO, Travis Kalanick, declared that he needed “leadership help.”
This latest lawsuit claims that Uber implemented the so-called “upfront” pricing scheme in September and informed drivers that fares are calculated on a per-mile and per-minute charge for the estimated distance and time of a ride. “However, the software that calculates the upfront price that is displayed and charged to the Users calculates the expected distance and time utilizing a route that is often longer in both distance and time to the one displayed in the driver’s application,” according to the suit.
In the end, the rider pays a higher fee because the software calculates a longer route and displays that to the passenger. Yet the driver is paid a lower rate based on a quicker route, according to the suit. Uber keeps “the difference charged to the User and the fare reported to the driver, in addition to the service fee and booking fee disclosed to drivers,” according to the suit.
The manipulation of prices between the amount charged to Users and the amount reported to drivers is clever and sophisticated. The software utilized in determining the upfront price is specifically designed to provide a route distance and time estimate based on traffic conditions and other variables but not to determine the shortest/quickest reasonable route based on those conditions. Meanwhile, the software utilized in the driver’s application, which navigates the drivers to the User’s destination, utilizes traffic conditions and other variables to provide the driver with a more efficient, shorter, or quicker route to the User’s destination, resulting in a lower fare payout to the driver.
The suit claims breach of contract, unjust enrichment, fraud, and unfair competition. The suit seeks back pay and legal fees, and it demands a halt to “the unlawful, deceptive, fraudulent, and unfair business practices.”
Uber declined comment.